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Cement shortage looming?

7 September 2012 02:43 am - 0     - {{hitsCtrl.values.hits}}

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Sri Lanka’s construction sector is likely to experience a cement shortage in the near future, with certain cement importers and dealers trying to hoard cement in the wake of a possible price hike, Mirror Business learns.

Sources at the Consumer Affairs Authority (CAA) confirmed that the large-scale importers of cement have requested for a price increase, though it was not clear about the percentage of the increase.

“There were five applications demanding a price revision. We have appointed a committee to look into it, and they will decide whether a price revision is really required,” CAA Chairman Rumi Marzook said.

There were media reports stating that cement price would probably go up by Rs.100. The current standard price of a 50kg cement pack is Rs.885.

A cement importer who talked to Mirror Business on the grounds of anonymity said, with the depreciation of the Sri Lankan rupee, both small and large scale importers are incurring huge losses in terms of their bottom lines.

According to analysts, the Sri Lankan rupee has depreciated more than 13 percent since February 2012, and has stabilized at Rs.132 level against the US dollar.

Meanwhile, Marzook said that the CAA will be resorting to legal actions against those who hoard cement to create an artificial cement shortage.

“We have already taken legal action against 10 cement dealers for hiding stocks. Our teams have been on the ground since Saturday (September 2) investigating into the reports and we found about 200 bags of cement that were hidden in stores,” he said.

A construction industry person told Mirror Business that in addition to the speculation of a price revision, the dealers are making use of the recent delays in cement shipments arriving in the country owing to global demand to create an artificial shortage in the cement market.

However, according to the Founder and President of the Chamber of Construction Industries Sri Lanka (CCI), Surath Wickramasinghe, so far there hadn’t been any reports of a cement shortage but admitted the possibility of a price hike in the near future.

Sri Lanka has cement market of over 4.2 metric tones, and it is estimated that the market is growing at the rate of 10 percent per annum.

According to construction industry personnel, the five largest bulk cement/clinker importers include Holcim, Tokyo-Cement, Ultra-Tech, Lafarge and Singha involved in cement bag packaging and network, representing over 90 percent of the market.
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